Thursday, June 28, 2007
Banks restrict lending to the poorest borrowers, causing the average price of houses sold to go up!
Yet another article misrepresenting the exclusion of low-priced-house borrowers by banks as a genuine surge in property prices. Banks and building societies are finally becoming more selective about who they lend to. They are less keen to lend to the 'sub-prime' market who usually occupy cheap housing. They are demanding higher deposits and giving lower multiples of salary to first-time buyers, who usually buy relatively cheap properties. They are shying away from individual But-to-Let investors, who also go for cheap flats and houses. With these groups largely now excluded, the average price is now made up of transactions at the middle and high end of the market (who have a lot of equity, which protects the banks' collateral) - so, it's no wonder the 'average' price has gone up!